variable mortgage 2.5 years ago with Springboard: Increased 5.85% to 6.8%

Hi everyone,

I remortgaged on a variable rate mortgage 2.5 years ago with Sub Prime lender Springboard. (I know!).

I needed money badly at the time and had no choice but to remortgage with them. (I was with AIB and fell into arrears but paid them off years ago but when I tried to remortgage with them, they declined even though I had not missed a payment in years. Basically it was because of the historic arrears).

The mortgage broker told me back then all I need is to stay with them for 2 years and he would move me onto a prime lender. I'm not in negative equity.

Terms are for 40 years interest and capital repayments. Interest rate 5.85%.

I got a letter today stating that "the interest rate will be changed with effect from 1st April to 6.8%"

The reason?

"Your new revised monthly payment reflects unpaid charges incurred (if any) throughout your mortgage term to date"

Can anybody please tell me what this is about and do I have any options?

I haven't missed a payment with them and the way this was done is scaring me. Feeling really trapped.

Thanks in advance.

Hi Wexfordian,

I am in the same boat, with a sub-prime lender. My rate is not too bad at the moment but with rates to fluctuate I am worrying as there are no published variable rates (they choose the rates on a case by case basis) as the prime lenders have.

6.8% seems very high (what is your rate at the moment), have you missed any payments recently?

After a few years of being with a sub-prime lender and proving that risk factors are low with their customers I feel there should be a Standard rate, it really worries me as as my mortgage is not small and while I am not in trouble now a 2% increase will be a completely different ballgame for us.

I think the key words in the letter you received are "if any". They're not saying that you missed payments but if you did it would be reflected in your new interest rate - ie, it would be even higher.

Sounds like they're doing the same as all other lenders and putting up their variable rate. Are you on variable?

You'll have to ring them to clarify it though

No-I never missed a payment and I'm on the variable rate.
A horrible example of greed and turning the screw on people who are under pressure as it is.
I hope a tsunami of karma comes their way.

"Your new revised monthly payment reflects unpaid charges incurred (if any) throughout your mortgage term to date"

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This is badly written, but I don't think it has anything to do with the interest rate. If you had missed a few payments, your new repayment would have to be higher to collect those repayments.

Under the Code of Conduct on Mortgage Arrears, a lender is not allowed charge a higher rate because people are in arrears. (I think?).

But you are not in arrears, so it's just their general increase in rates.

Unfortunately the old model for sub-prime lending has changed. After 2 years of repairing your credit, you could switch to a new lender, but the lenders are not taking switches now, especially from the sub-primes.

I don't think that there is anything you can do.